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Asia stocks higher on hopes for US budget deal

Published on NewsOK
Modified: December 4, 2012 at 11:40 pm •
Published: December 4, 2012

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BANGKOK (AP) — Asian stock markets rose Wednesday as investors became increasingly convinced that U.S. political leaders will reach a budget deal that avoids a major hit to the world's No. 1 economy. Chinese shares soared on hopes for more stimulus measures.

FILE - In this Nov. 15, 2012, file photo, traders work on the floor at the New York Stock Exchange, in New York. World stock markets meandered Tuesday, Dec. 4, as traders weighed a surprise drop in U.S. factory production against hopes that the U.S. will avoid the so-called fiscal cliff. (AP Photo/Seth Wenig, File)

Negotiations between the White House and the U.S. Congress have been revving up in recent days in order to reach a deal aimed at averting the so-called fiscal cliff, which is a series of sharp government spending cuts and tax increases that begin to kick in Jan. 1 and could cause a recession.

Despite political posturing and a deep divide on critical issues, most analysts think a deal acceptable to both President Barack Obama and congressional Republicans will be cobbled together before the end of the year.

Analysts at DBS Bank Ltd. said that "the US fiscal cliff is viewed as political theatre and not as an imminent threat to the US economy."

"Unlike 2010, both the White House and the Republicans have been careful in communicating that, despite the differences in opinions over how to rein in the fiscal deficit, the door is open for a compromise solution by the end of the year."

Mainland Chinese shares soared a day after the government pledged to maintain policies intended to strengthen the economy and also expressed a willingness to "fine tune" them and make them more effective.